The Hindu : Jaswant promises food to the needy

Online edition of India's National Newspaper
Friday, Dec 20, 2002

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Jaswant promises food to the needy

By Our Special Correspondent

NEW DELHI DEC. 19. The Union Finance Minister, Jaswant Singh, today reiterated his promise of "putting more money in the housewives' purse'' and also held out the assurance that sales tax concessions granted by individual States to entrepreneurs would be factored into the new Value Added Tax (VAT) system which is to become operational all over the country from April next year.

Replying to the debate on the mid-year review of the economy in the Rajya Sabha today, Mr. Singh agreed with the point raised by the CPI(M) member, Nilotpal Basu, that industrial revival would depend much on the revival of demand in the economy. "I accept the point that unless citizens have more money to spend, revival of demand cannot take place. Therefore, I remain committed to what I said on the first day as Finance Minister that I want to provide food to the needy and more money in the housewives' purse.''

Taking on another point raised by Mr. Basu about ways of mobilising resources, Mr. Singh said it was a challenge that had to be met. "Agriculture today accounts for about 26 per cent of the gross domestic products, services for about 48 per cent and the rest is manufacturing which is about a quarter. Now, agriculture is out of the taxation net; the small-scale sector is given various tax concessions and taxing of services is in the initial stages. That leaves a very small manufacturing base from where resources can be raised,'' he added.

Consequently, the Finance Minister said, the attempt was being made to move the country to country-wide service tax and VAT so that both the Centre and the States could raise more resources.

At the same time, the tax administration was being modernised and simplified so that the "citizen does not think that paying taxes is a penal activity''.

Responding to fears raised by the Leader of the Opposition in the Rajya Sabha, Manmohan Singh, about an unprepared move towards VAT by April 1, 2003, the Finance Minister said the issue had been discussed in detail at the high-power committee of State Finance Ministers which was chaired by him and "we have examined it from all sides.The Union Cabinet had also decided on bringing about a Constitutional amendment to allow States to collect service tax and the contours of the proposed legislation would be shared with the Chief Ministers during the National Development Council (NDC) meeting here on Saturday.''

Mr. Singh also said that a number of States had already enacted legislation to facilitate the introduction of VAT and a compensation formula for States losing revenue in the initial years had also been worked out.

The compensation package, which would be in force for three years, had found favour with States.

To a specific question about existing sales tax and other concessions extended by individual States to entrepreneurs, he said such concessions would be factored in while working out the VAT system.

About the criticism that the mid-year economic review was a "bland'' document not listing out strong measures required to revive the economy, the Finance Minister said the "mid-year review is not a Bible of economic activity; it is a statement and route chart for the economy. But I am happy that the initiative has been appreciated by everybody''.

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